Turning Good News Into Bad

Discussion in 'Economy' started by Stephanie, Jul 13, 2006.

  1. Stephanie

    Stephanie Diamond Member Supporting Member

    Jul 11, 2004
    Thanks Received:
    Trophy Points:
    Posted 7/12/2006

    Media Bias: You'd think that when an unalloyed bit of good news comes down the pike, the media would be eager to report it that way. But, as President Bush's new deficit forecasts show, that's hardly the case.

    Bush on Tuesday revealed that this year's budget deficit will be slightly below $300 billion — way less than the $425 billion estimated just a year ago. The gap now is just 2.3% of GDP — exactly equal to the 40-year average. It's also within spitting distance of the 1.6% that would represent the halving of the deficit that Bush is shooting for.

    The reason for all the progress? A rip-roaring economy that's gushing revenues following Bush's tax cuts in 2003. Indeed, we've added more than $2.2 trillion in GDP in just three years, a miracle of growth that has come even as we fought a global war on terror, clawed our way out of a recession and brought the stock market back from near oblivion.

    Doing a rough calculation, tax revenues have jumped an amazing 34.5%, or $616 billion, since 2003. Of that amount, $250 billion came as a "surprise" — that is, government and private economists' static models didn't predict it. As the chart shows, Bush's tax cuts have brought revenues as a share of GDP — the measure favored by economists — back to their long-term average.

    None of this, however, has come as a surprise to those who know from economic history that tax cuts yield greater economic growth and more money for the Treasury.

    It happened under Coolidge in the 1920s, under Kennedy in the 1960s, under Reagan in the 1980s and it's happening again today under Bush. It's such well-trod ground, and the record is so clear, it's a wonder anyone still questions it.

    The shrinking deficit should make those who worry about it, including the media, very happy. But that doesn't seem to be the case.

    As noted by the Media Research Center, a journalism watchdog group, coverage of this "good news" was spun in an overwhelmingly negative fashion by the nation's big media.

    At The New York Times, a prominent subheadline noted: "A second straight year of less red ink fails to soothe many budget analysts." The Washington Post's coverage included the headline: "Long-Term Outlook Still Seen As Bleak." Incredibly, it quoted administration critics who lay the deficit shrinkage to "shifts in the economy, including fatter corporate profits, executive bonuses and stock market gains, that reflect growing inequality."

    The Los Angeles Times couldn't help itself either. "Bush Gives Deficit News A Positive Spin" was its headline. The big "spin," however, was in the Times' story, not the administration's briefing, which was based entirely on facts.

    NBC's Brian Williams highlighted the idea — again from White House "critics" — that "the White House has deliberately inflated its own deficit projections in the past few years to score political points when the actual numbers came in lower."

    So a simple, positive report on the government's finances is swamped by negativity and cynicism. No wonder more than 40% in polls think the economy is in dire trouble, when in fact it has rarely been healthier in our 230-year history.

    We've noted before how our own IBD/TIPP poll shows people remain optimistic about their own finances, but pessimistic about the economy. This showed up again in our July survey taken just last week.

    The overall Economic Optimism Index ticked up 2.4% to 47.3, but that was its sixth straight month in negative (below 50) territory. Meanwhile, the Personal Finance component jumped 4.6% to 59.2.

    The answer to us for this anomaly is that the media — by harping on the negative and playing up any piece of bad news while playing down the good — have made it so.

    This relentless negativity has an impact on people's psyche. We're told so often that the economy is bad, that the "gap between rich and poor" is growing, that deficits are going to swallow us up and so forth, we begin to believe it, though it doesn't reflect our own situations.

    It's like the self-help book from the '70s, "I'm OK—You're OK." Only now, thanks to the mainstream media, it's "I'm OK, But (Apparently) You're Not."

    Related Resources:
  2. red states rule

    red states rule Senior Member

    May 30, 2006
    Thanks Received:
    Trophy Points:

    Blows the liberal talking points on how tax cuts hurt the economy, all to hell

Share This Page